Oregon narrows options for troubled health exchange to 2, including linking to federal site

PORTLAND, Ore. – Officials with Oregon’s troubled health insurance exchange say they’ve narrowed the options for the site’s future to two: switching to the federal exchange, or staying with the current technology and hiring a new contractor to fix it.

Cover Oregon’s interim chief information officer Alex Pettit told board members Thursday that a third option — transferring technology from another state — would be too expensive.

Earlier this month, Maryland chose to replace its glitch-filled exchange with technology from Connecticut at an estimated cost of $40 million to $50 million.

Cover Oregon’s exchange is the only one in the nation that still doesn’t let the public enrol in coverage in one sitting. Instead, the public must use a time-consuming hybrid paper-online application process.

The technology fiasco has been an embarrassment for Oregon and its governor, Democrat John Kitzhaber. The state usually is seen as a pioneer in health care.

A February report by Cover Oregon consultant Deloitte Development LLC made public in April found the least expensive fix for Oregon’s health exchange would be linking it to the federally run marketplace, at a cost of $4 million to $6 million. The transition would take five to eight months, the report said.

Officials said that option meets the timeline, requires no further development and is functional. It also allows Oregon to maintain control over plans offered. But it would also mean the loss of full integration of Medicaid and private health plans, a key aspect of Oregon’s earlier exchange aspirations.

Fixing Cover Oregon’s existing portal with the help of a new technology contractor would cost $25.5 million in development and maintenance costs just this year — not counting 2015 costs, according to the Deloitte report.

That option maintains the current infrastructure and technology, but would require reworking of code and architecture, the hiring of staff with more expertise, and some new development.

Using another state’s technology would cost Oregon $17 million to $20 million to buy and configure technology that’s already working in another state, according to the Deloitte analysis. That option also would mean the state has to bring in new hardware and software to run the exchange.

Officials said at this time they are focused only on making the website work for individuals. Fixing the small-business plan selection part of the portal has been deferred to 2015, because it would add to the cost and complexity of revamping the troubled exchange.

A Cover Oregon technology committee will bring a final recommendation to the board by the end of April.

Also Thursday, the board accepted the resignation of interim executive director Bruce Goldberg effective immediately. Goldberg had been interim director of Cover Oregon for several months, since the previous executive director went on medical leave and resigned. Last month, Goldberg also resigned as director of the Oregon Health Authority, the agency originally in charge of designing and building the exchange.

Cover Oregon’s board hired turnaround consultant Clyde Hamstreet to take over the director’s duties while the search for a permanent replacement continues. Officials said the search panel will recommend the final candidate at the end of May.

In addition to running Cover Oregon’s day-to-day operations, Hamstreet will assess the organization’s business operations and financial management, and recommend a restructuring plan.

So far, about 217,000 Oregonians have enrolled in coverage through Cover Oregon. About 63,000 of those enrolled in private health plans, while nearly 154,000 enrolled in the Oregon Health Plan, the state’s version of Medicaid.

The state has paid its main technology contractor Oracle Corp. $134 million for the exchange and is withholding $26 million. Oregon and Oracle have begun parting ways and the state has hired a law firm to review legal options.